Chapter OT26017

Published date13 March 2016
Record NumberOT26017

Not all expenditure up to the end of Stage 3 will be on research and development.

The character of the expenditure must be such that it can reasonably be regarded as “activities in the field of natural science” and also “for the extension of knowledge”. Thus, drilling a well to see if there is oil in place may well be on research and development depending on when in Stages 2 to 5 it takes place. However, economic planning, deciding how best any field might eventually be developed as between alternative possibilities, negotiating over the sale price of gas etc, whilst all being steps that may take place before the end of Stage 3 are not of themselves research & development. These activities can be very important and resource intensive but the fact that they take place before the end of Stage 3 does not turn them into research & development. These examples are illustrative and not exhaustive.

Although these costs are excluded from RDA claims they may qualify for relief under other codes. Relief...

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